One of the biggest problems in terms of healthcare that people are facing these days is an inability to afford potentially life saving drugs. This is especially true for the more than 12 million people that find out they have cancer each year. For years, studies have said that one of the reasons that cancer drugs cost so much is because of the cost to research and develop these drugs. At one point, studies were saying that it cost an estimated $2.7 billion for each new cancer drug.


Now, it turns out, that cancer drugs might actually be cheaper to develop than we thought. Newer studies have shown that the median cost to develop each new cancer drug is expected to cost just over $650 million, less than a third of the previously believed price. The study looked at 10 newer cancer drugs from 10 different companies.


Out of the 10 companies, nine were able to make a profit, with a total profit of $67 billion between the groups and a total of $7.2 billion to research and develop the drugs. While obviously the companies need to make a profit to continue operating in most cases, many were outraged with the new study that showed that drug prices keep going up, while the cost to develop them keeps going down.

The initial outrage was to be expected, but experts in the field said that there’s more to it than making large profits from a single drug. The Biotechnology Innovation Organization said that around 95 percent of cancer drugs that are developed never make it to pharmacies around the world, causing huge losses in research and development. To offset these losses, the successfully developed drugs are sold for much more than it cost to create them.


Other experts such as Joseph DiMasi of the Tufts Center for the Study of Drug Development said that the study is skewed. “They’re not including companies that have had only cancer drug failures, or had a high percentage of their cancer drugs fail,” he said. One of the people who conducted the study, Sham Mailankody, disagreed. “I think these results would suggest that pharmaceutical drug development is extremely lucrative and the current drug prices are not necessary justified by the (research and development) spending on these drugs,” he said.


The Pharmaceutical Research and Manufacturers of America (PhRMA), said that “The risk inherent in (research and development) is the key reason why 90 percent of publicly traded biopharmaceutical companies…did not make a profit.” The group further explained that companies who haven’t received Food and Drug Administration approval for their drugs face a massive loss when one of their drugs doesn’t make it past clinical trials.


While the study seemingly left us with the feeling that pharmaceutical companies only raised the prices for cancer drugs to make large profits, we’re now left with more questions than answers. Exactly how much are the big pharma companies losing when they can’t develop a drug successfully and how much are larger companies making in profits? The study only looked at smaller drug companies who released just one successful cancer drug.

The people who conducted the study said that pharmaceutical companies should reveal the data that they’re working with when trying to develop a new drug so that other analysts can come in and help develop cheaper drugs. For now, many around the world, and especially in the United States are struggling to pay for cancer drugs. Dr. Aaron Kesselheim noted that the dark reality is that companies don’t worry about how much they’ve saved on research and development, though, and that the prices “are based on what the market will bear.” For now, though, it doesn’t seem the market is slowing down at all.